The government-sponsored rescue plan for SVB Financial Group SVB subsidiary Silicon Valley Bank was lauded by a section as the right thing to do. It, however, did not cut ice with Vivek Ramaswamy, who has declared his candidacy for the Republican presidential primary.
What Happened: “Crony capitalism & fear-mongering reign supreme in America,” Ramaswamy tweeted.
The Federal Deposit Insurance Corporation, which insures only deposits up to $250,000, has now selectively changed the rules “after the fact” for SVB, he noted.
The entrepreneur was referring to the government announcement that all SVB depositors will have access to all of their money starting Monday.
The entrepreneur noted that with this the U.S. government now incentivizes greater risk-taking by banks and depositors in the future. This also teaches large depositors at smaller banks to simply throw money at risky banks without diversifying or conducting diligence, he added.
“Smaller banks like SVB lobbied for years for looser risk limits by arguing that their failures would not create systemic risk and thus would not merit special intervention by the U.S. government,” Ramaswamy said.
Treasury Secretary Janet Yellen’s announcement has proved otherwise, he added.
Image and article originally from www.benzinga.com. Read the original article here.